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Thread: Why is There a Housing Crisis?

  1. Top | #11
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    Here's my two cents. After the bubble in the Housing market that collapsed just prior to the recession in 2006 or so, builders stopped building for many years, leaving a shortage of housing once things started to ramp up very quickly over the past few years. Interest rates are at an all time or almost all time low, which imo, makes them artificially low at this point. That has caused a lot of first time home owners the opportunity to buy homes which they previously couldn't afford, which has quickly led to a shortage of housing. My small city never had this problem in the 22 years that I've lived here. While homes once sat the market for many months or years, they are now selling in days, often with bidding wars in place.

    Now that this has happened, developers are going nuts building new subdivisions in areas that were never developed before, which is causing all kinds of new problems unrelated to the OP, so I won't go there. How long will interest rates stay at these extremely low rates? How long will it take before builders once again over develop? How long will it take until the next recession? All of those things have an impact on the housing market.

    Luckily, we live in what has been perceived as the more desirable part of town and we are happy to see it now being racially integrated like never before, making it even more desirable since according to surveys, most Americans now want to live in mixed race neighborhoods. But, gentrification is also creeping into areas not considered desirable in the past and I think we may also be suffering from Atlanta sprawl, since ATL is quickly becoming unaffordable to most middle class folks. it's complicated.

  2. Top | #12
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    I ordered our new washer/dryer on May 1st. Still no word on when it will be delivered.
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  3. Top | #13
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    In Ontario there just aren't enough homes to support our population. In the past 5 years immigration has out-stripped new builds by a (very) wide margin.

  4. Top | #14
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    From this article:

    https://www.millionacres.com/real-es...nvestors-care/


    The current situation

    With a 4.8-month supply of homes as recently as May 2020, inventory was fairly normal, but it's been steadily dropping ever since. In December 2020, there was only a 1.9-month supply of homes, the lowest ever recorded. This means we are most definitely in a housing shortage situation. Freddie Mac (OTCMKTS: FMCC) estimates 2.5 million houses need to come on the market to combat the shortage.

    […]

    This latest housing shortage

    In this latest housing shortage, the coronavirus pandemic played a role. When the country first locked down in March 2020, people feared another housing crisis similar to what happened in 2008. And for about a month or two, demand for housing was low.

    After a couple of months, however, there was pent-up demand for housing, partly to escape an urban apartment, and partly due to record-low mortgage rates. But there was less building happening during this time of increased demand.

    Slowed building

    Building was slow for several reasons. It was harder to do business during lockdowns, which led to supply-chain issues. But there were supply shortages as well. A lumber shortage, for example, which occurred largely from wildfires in the Western United States, drove up the price of lumber, making it even tougher for affordable homes to enter the market. There are also limited lots on which to build and a deficit of skilled labor.
    TSwizzle may not have noticed the significant national change to housing shrtage because it was an ongoing problem in CA for a while. But for the rest of the country, things have changed dramatically.


    One of my ponderings was when I started reading about housing shortages in suburban and rural areas. I had previously assumed housing shortages and bidding wars were an urban thing because so many people were leaving the countryside and moving urban. But when I started seeing it here, too, I began to ponder why. Hence the thread: an interest in what others think based on their different perspectives than mine.

  5. Top | #15
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    Quote Originally Posted by Rhea View Post
    From this article:

    https://www.millionacres.com/real-es...nvestors-care/


    The current situation

    With a 4.8-month supply of homes as recently as May 2020, inventory was fairly normal, but it's been steadily dropping ever since. In December 2020, there was only a 1.9-month supply of homes, the lowest ever recorded. This means we are most definitely in a housing shortage situation. Freddie Mac (OTCMKTS: FMCC) estimates 2.5 million houses need to come on the market to combat the shortage.

    […]

    This latest housing shortage

    In this latest housing shortage, the coronavirus pandemic played a role. When the country first locked down in March 2020, people feared another housing crisis similar to what happened in 2008. And for about a month or two, demand for housing was low.

    After a couple of months, however, there was pent-up demand for housing, partly to escape an urban apartment, and partly due to record-low mortgage rates. But there was less building happening during this time of increased demand.

    Slowed building

    Building was slow for several reasons. It was harder to do business during lockdowns, which led to supply-chain issues. But there were supply shortages as well. A lumber shortage, for example, which occurred largely from wildfires in the Western United States, drove up the price of lumber, making it even tougher for affordable homes to enter the market. There are also limited lots on which to build and a deficit of skilled labor.
    TSwizzle may not have noticed the significant national change to housing shrtage because it was an ongoing problem in CA for a while. But for the rest of the country, things have changed dramatically.


    One of my ponderings was when I started reading about housing shortages in suburban and rural areas. I had previously assumed housing shortages and bidding wars were an urban thing because so many people were leaving the countryside and moving urban. But when I started seeing it here, too, I began to ponder why. Hence the thread: an interest in what others think based on their different perspectives than mine.
    My husband and I have been in our house for a number of years now and it's "that time again", where we are ready, like hermit crabs, to seek a new shell.

    While I realize I could make much more than asking on my home, and it's a really old home, I realize that to sell now would mean to also buy into bubbled costs as well. I doubt that the margin would cover the spread when things contract, and all my savings over years putting into my mortgage would evaporate.

    So, I'm stuck in this house, and am being forced to actually deal with the problems with it, lest I find myself fucked hard when things normalize.

    Or, I could risk renting a few years, and just put the money in a high interest account of some kind.

    Either way, there's no way to get out of my current home without risking going upside down. This is what the housing shortage means to me: being trapped where I am. Still, it's a better position than most.

  6. Top | #16
    Cyborg with a Tiara
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    Quote Originally Posted by Jarhyn View Post
    My husband and I have been in our house for a number of years now and it's "that time again", where we are ready, like hermit crabs, to seek a new shell.
    Interesting perspective - because moving for a change of pace is totally outside of my thought process. My husband bought our home (before we were together) more than 30 years ago, and I’ve lived here for 25 years.

    We have pondered that in early retirement we might rent our home out and do a “city year” where we rent a place in an actual city to see what that’s like, then do a couple of years on the road. So we’ve had to always think of upkeep (and updating) this 100+ year old house. But to sell? It would need to overcome much inertia and waiting out a housing shortage is not stressful for us.

  7. Top | #17
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    Quote Originally Posted by TSwizzle View Post
    Quote Originally Posted by Toni View Post
    A few other things have come into play, I think:
    1. Mortgage rates are extremely low. This has the net effect of increasing prices for houses, as mortgage lenders qualify buyers based on what total monthly mortgage payment a buyer can afford. If they think that you can afford $1000/.month, then when mortgage rates are lower, you can qualify for a more expensive house. If rates are higher, you will qualify for a lower priced home. Since this applies across the market, it has the net affect of either driving prices up or lowering prices.
    You make excellent points but I think this is probably the most important one. People are overpaying on properties because the monthly payment is what they look at rather than the value of the property.
    The value of a property is what someone will pay for it. Many buyers are guided and almost all buyers are limited by what the bank will approve. That amount is generally based on the buyers income, other debt and credit worthiness. What portion of that is amortized purchase price and what part is interest varies by interest rate.

    People are ‘over paying’ because of the lack of availability of less expensive housing. I am stunned by what first time home buyers are paying for housing ( rent or own) and it is causing me to re-think the practicality/affordability of relocating to be nearer our children who live/work in a major metropolitan area (vs staying in our small town.)

  8. Top | #18
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    Quote Originally Posted by Rhea View Post
    Quote Originally Posted by Jarhyn View Post
    My husband and I have been in our house for a number of years now and it's "that time again", where we are ready, like hermit crabs, to seek a new shell.
    Interesting perspective - because moving for a change of pace is totally outside of my thought process. My husband bought our home (before we were together) more than 30 years ago, and I’ve lived here for 25 years.

    We have pondered that in early retirement we might rent our home out and do a “city year” where we rent a place in an actual city to see what that’s like, then do a couple of years on the road. So we’ve had to always think of upkeep (and updating) this 100+ year old house. But to sell? It would need to overcome much inertia and waiting out a housing shortage is not stressful for us.
    I love the idea of doing a ‘city year’ to see if we’d like it, as well as some years of traveling. I’d also looove to do a lake house year as well, but that lies in the realm of fantasy as we do not now and are very unlikely to ever own a lake house. My husband is less keen and is also still working while I retired early. Money is of course a huge factor. We’ll have to see how it is in a couple of years.

  9. Top | #19
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    Quote Originally Posted by Derec View Post
    Quote Originally Posted by Toni View Post
    and writing the most heart rending personal letters possible to go with their offers.
    What about? Surviving Andrea Doria?

    I agree with Jimmy for once. If you don't have to buy right now, hold off for the time being. Or, as Shaun said ...


    Same goes for cars, which also have a supply crunch due to a chip shortage.

    The fact is that there is a housing crisis, period. Too many families cannot afford to purchase appropriate housing for themselves or to rent decent housing. Bidding wars make it worse because it drives up the prices.
    It's an indication of a market imbalance. Eventually the market will settle. But for real estate, the supply side of the market has a lot of inertia. You decide to build a new subdivision or condo building due to a hot market and it takes a while to actually build it.
    Heart rending was a bit of hyperbole but: letters that pain as warm a portrait if the prospective buyer as possible, highlighting qualities and characteristics designed to appeal to the sellers, how much you love and appreciate the unique characteristics of the home you wish to buy. In fact I believe we wrote a similar letter when we purchased our home more than 30 years ago. The sellers had raised their family here and we wrote about how much we wanted to raise our children in such a home. Times were different then but we had a very short time frame to buy as we were moving hundreds of miles and several states away.

  10. Top | #20
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    This is a good read on the situation in Ontario:

    https://mikepmoffatt.medium.com/onta...n-4c824722b7ca

    It's the 'short' version, if you navigate to his profile there are several other posts that go into more detail.

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